HEIRS OF JULIAN TIRO, 

petitioners,
vs.
PHILIPPINE ESTATES CORPORATION, respondent.

DECISION

CHICO-NAZARIO, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the
Decision1 dated 1 July 2005, rendered by the Court of Appeals in CA-G.R. CV No. 78582, which affirmed
the Decision2 dated 16 April 2002 of the Regional Trial Court (RTC), Branch 54, Lapu-Lapu City, in Civil
Case No. 4824-L dismissing petitioners’ complaint and declaring the respondent as the owner of the
disputed property.

Petitioners Guillerma Tiro, Dominga Tiro Nunez and Maximo Tiro filed before the RTC a Complaint for
Quieting of Title against respondent Philippine Estates Corporation, a corporation duly organized and
existing under the laws of the Philippines. The complaint was docketed as Civil Case No. 4824-L.
Petitioners alleged that they are the children of the late Julian Tiro and the authorized representatives of
the Heirs of the late Pedro Tiro. Both decedents were purportedly, during their lifetime, the lawful absolute
and registered owners of the disputed land as evidenced by Original Certificate of Title (OCT) No. RO-
1121.3 The disputed property is herein described as follows:

A parcel of land (Lot 2914 of the Cadastral Survey of Opon, L.R.C. Record No. 1003) situated in
the Barrio of Marigondon, Municipality of Opon, Province of Cebu, Island of Mactan x x x;
containing an area of EIGHT THOUSAND ONE HUNDRED TWENTY (8,120) SQUARE
METERS.4

Petitioners averred that they and their predecessors-in-interest had been in actual possession of the
disputed land since time immemorial until they were prevented from entering the same by persons
claiming to be the new owners sometime in 1995. After examining the records found in the Office of the
Register of Deeds of Lapu-Lapu City, they discovered that OCT No. RO-1121 had already been cancelled
as early as 1969 and that the subject property, after several other transfers, was presently registered in
the name of respondent under Transfer Certificate of Title (TCT) No. 35672.5

The records in the Office of the Register of Deeds showed each transfer involving the disputed land.
Petitioners learned that OCT No. RO-1121, registered in the names of Julian and Pedro Tiro, was
cancelled on 10 September 1969. In its place, TCT No. 2848 was issued in favor of Spouses Julio Baba
and Olimpia Mesa. The registration of the disputed property in favor of the Spouses Baba was supported
by two documents: (1) an Extrajudicial Declaration of Heir and Confirmation of Sale6 dated 20 August
1969, executed by Maxima Ochea (Ochea), claiming to be the only surviving heir of Julian and Pedro
Tiro, wherein she confirmed and ratified an alleged sale of the subject land made before World War II by
Julian and Pedro Tiro in favor of Spouses Bibiano Amores and Isabel Digno; and (2) another document
entitled "Deed of Confirmation,7" also dated 20 August 1969, executed by the Spouses Amores, wherein
they verified that they subsequently transferred the disputed property to the Spouses Baba sometime in
1947.

On 20 June 1979, TCT No. 2848 was cancelled to give way to the issuance of TCT No. 9415 in the name
of Spouses Ronaldo Velayo and Leonor Manuel, after the Spouses Baba sold the disputed property to
them.8 Subsequently, the same property was sold by the Spouses Velayo to Pacific Rehouse
Corporation, as a consequence of which TCT No. 9415 was cancelled and TCT No. 30186 was issued in
the name of the latter on 16 February 1995.9 Finally, on 25 October 1996, following the sale of the
disputed land to respondent, TCT No. 30186 was cancelled and TCT No. 35672 was issued in its name.10
Petitioners averred that Ochea, who executed the document "Extrajudicial Declaration of Heir and
Confirmation of Sale," which resulted in the cancellation of OCT No. RO-1121 in the name of Julian and
Pedro Tiro, was not in any way related to Julian and Pedro Tiro. It was the petitioners’ contention that
since Ochea was not an heir of the original registered owners, she had no right to cause the transfer of
the disputed property and, thus, her transfer and all subsequent transfers of said property, including that
made to respondent, were invalid.11 Instead of presenting documents to evidence their relationship to the
decedents Julian and Pedro Tiro, petitioners offered the testimonies of petitioners Maximo Tiro12 and his
son-in-law Joveniano Diasana.13 Finally, the petitioners prayed that all the transactions emanating from
the "Extrajudicial Declaration of Heirs and Confirmation of Sale," executed by Maxima Ochea, be
declared void, including the transfer made in favor of the respondent; that the title which was issued in the
name of respondent be cancelled; and that the property be restored and registered in the name of the
petitioners.14

In its Answer dated 10 February 1998, respondent claimed that its predecessor-in-interest Pacific
Rehouse Corporation acquired the subject land from the Spouses Velayo, the registered owners of the
property who were also in possession of the same at the time of the sale. There was nothing in the title or
any circumstances during the sale that would indicate any defect in the Spouses Velayo’s title to the
property. Respondent pointed out that 27 years had elapsed since the cancellation of OCT No. RO-1121
before petitioners asserted their rights over the disputed land. Moreover, petitioners’ predecessors-in-
interest Julian and Pedro Tiro did not question the cancellation of their title to the property during their
lifetimes. Hence, respondent argued that petitioners’ action for quieting of title was barred by laches and
prescription.15

To support its allegations, respondent presented TCT No. 2914 in the name of the Spouses Velayo as
proof that they were the registered owners of the disputed property at the time they sold it to Pacific
Rehouse Corporation.16 Additionally, respondent presented a Decision17 dated 28 June 1994 in Civil Case
No. R-1202, entitled Spouses Velayo v. Spouses Tiro, rendered by the Municipal Trial Court (MTC) of
Lapu-Lapu City to further prove that the Spouses Velayo were also in possession of the disputed property
at the time of its sale to Pacific Rehouse Corporation. Civil Case No. R-1202 was a case for Forcible
Entry with Writ of Preliminary Mandatory Injunction, and in its Decision dated 28 June 1994, the MTC
declared the Spouses Velayo the rightful possessors of the subject property and ordered petitioner
Maximo Tiro and his co-defendant spouse to vacate the portion of the property which they forcibly entered
on 7 May 1994. Respondent likewise presented the Deed of Sale18 dated 4 October 1994 executed by the
Spouses Velayo in favor of Pacific Rehouse Corporation; the Deed of Transfer19 dated 23 October 1996
executed by Pacific Rehouse Corporation in favor of respondent; and various tax declarations issued in
the names of the Spouses Baba, Spouses Velayo, Pacific Rehouse Corporation, and respondent during
the years that each of them claimed ownership over the disputed property.20

On 16 April 2002, the RTC issued a Decision21 in Civil Case No. 4824-L dismissing petitioners’ Complaint.
The trial court noted that petitioners’ claims of filiation to Julian and Pedro Tiro were not supported by
documents. The testimonies of petitioners’ witnesses were also inconsistent as to the location of the
disputed land, as well as the number of Pedro Tiro’s children. The RTC stressed that even assuming that
petitioners were heirs of the late Julian and Pedro Tiro, and Maxima Ochea was in no way related to
them, petitioners’ claims had already prescribed, considering that the Complaint was filed more than ten
years since the registration of the disputed property in the name of the Spouses Baba in 1969.
Petitioners’ allegation that they were in continuous possession of the subject property until 1995 was also
belied by the Decision dated 28 June 1994 of the MTC in Civil Case No. R-1202, ordering petitioners to
vacate the disputed property, which they forcibly entered, and to restore possession to the Spouses
Velayo. Lastly, the RTC ruled that respondent was an innocent purchaser for value who relied on the
correctness of the certificate of title in the name of the vendor.

Petitioners filed a Notice of Appeal on 2 May 2002 questioning the 16 April 2002 Decision of the RTC.
The petitioners filed with the Court of Appeals an appeal docketed as CA-G.R. CV No. 78582, questioning
the decision rendered by the trial court.
However, instead of filing an Appellants’ Brief as required by the Court of Appeals, petitioners filed before
the Court of Appeals in CA-G.R. CV No. 78582 a Motion to Grant New Trial Pursuant to Section 1, Rule
53,22 on 8 January 2004. They attached as annexes to their motion the following documents to prove that
Julian Tiro was their father: (1) Certificates of Baptism of Pastor Tiro and Dominga Tiro;23 (2) marriage
contract of Dominga Tiro;24 (3) Certificate of Marriage of Guillerma Tiro;25 (4) Certification of Marriage of
Pastor Tiro;26 and (5) Certificate of Baptism of Victoria Tiro.27 In a Resolution28 dated 5 August 2004, the
appellate court denied the motion.

In its Decision dated 1 July 2005, the Court of Appeals likewise denied the petitioners’ appeal in CA-G.R.
CV No. 78582 and affirmed the RTC Decision dated 16 April 2002 in Civil Case No. 4824-L. The
appellate court found that petitioners failed to prove that they were the heirs of Julian and Pedro Tiro. It
also took into account the fact that during their lifetime, Julian and Pedro Tiro never questioned the
transactions which affected their land. The Court of Appeals gave significant weight to the respondent’s
statements that it had acquired the subject property from the registered owners, supported by the
registered titles that were presented in court. Thus, the Court of Appeals held that even assuming that the
first few transfers turned out to be fraudulent, the transfer to respondent, a purchaser in good faith, may
be the root of a valid title.29

Petitioners filed a Motion for Reconsideration dated 25 July 2005,30 which the Court of Appeals denied in
a Resolution dated 28 October 2005.31

Hence, the present Petition, in which petitioners make the following assignment of errors:

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING THAT THE ACT
OF THE REGISTER (sic) OF DEEDS OF REGISTERING A CLEARLY VOID AND
UNREGISTRABLE DOCUMENT CONFERS NO VALID TITLE ON THE PRESENTOR AND HIS
SUCCESSORS-IN-INTEREST.

II

THE COURT OF APPEALS GRAVELY ERRED IN NOT APPLYING THE DOCTRINE IN

SPOUSES SANTIAGO, ET AL. VS. COURT OF APPEALS, ET AL., G.R. [NO.] 103959,
AUGUST 21, 1997 WHEREBY IT IS HELD [THAT] "THE TORRENS SYSTEM DOES NOT
CREATE OR VEST TITLE. IT ONLY CONFIRMS AND RECORDS TITLE ALREADY EXISTING
AND VESTED. IT DOES NOT PROTECT A USURPER FROM THE TRUE OWNER NOR CAN IT
BE A SHIELD IN THE COMMISSION OF FRAUD. WHERE ONE DOES NOT HAVE ANY
RIGHTFUL CLAIM OVER A REAL PROPERTY, THE TORRENS SYSTEM OF REGISTRATION
CONFIRM[S] OR RECORD[S] NOTHING.32

This Petition lacks merit.

Petitioners’ main contention is, since Ochea was not even related to either Julian or Pedro Tiro, the
"Declaration of Heir and Confirmation of Sale" which she executed could not have resulted in the
cancellation of OCT No. RO-1121 in the names of Julian and Pedro Tiro. They further argue that since
the initial transfer of the disputed land was fraudulent, therefore, all the subsequent transfers, including
that made to respondent, were all invalid.

Petitioners’ arguments are unfounded.

Insofar as a person who has fraudulently obtained property is concerned, the consequently fraudulent
registration of the property in the name of such person would not be sufficient to vest in him or her title to
the property. Certificates of title merely confirm or record title already existing and vested. The
indefeasibility of the torrens title should not be used as a means to perpetrate fraud against the rightful
owner of real property. Good faith must concur with registration because, otherwise, registration would be
an exercise in futility.33 However, where good faith is established, as in the case of an innocent purchaser
for value, a forged document may become the root of a valid title. 34

A person is considered in law as an innocent purchaser for value when he buys the property of another,
without notice that some other person has a right or an interest in such property, and pays a full price for
the same at the time of such purchase, or before he has notice of the claims or interest of some other
person in the property. A person dealing with registered land may safely rely on the correctness of the
certificate of title of the vendor/transferor, and the law will in no way oblige him to go behind the certificate
to determine the condition of the property. The courts cannot disregard the rights of innocent third
persons, for that would impair or erode public confidence in the torrens system of land registration. Thus,
a title procured by fraud or misrepresentation can still be the source of a completely legal and valid title if
the same is in the hands of an innocent purchaser for value.35

In the present case, respondent was clearly an innocent purchaser for value. It purchased the disputed
property from Pacific Rehouse Corporation, along with other parcels of land for a valuable
consideration, i.e., shares of common stock of respondent with a value of P148,100,400.00. Pacific
Rehouse Corporation, in turn, purchased the property from Spouses Velayo, also for valuable
consideration in the amount of P1,461,600.00. The certificates of title of Pacific Rehouse Corporation and
the Spouses Velayo were clean and appeared valid on their face, and there was nothing therein which
should have put the respondent on its guard of some defect in the previous registered owners’ title to the
disputed property. In addition to their certificate of title, the Spouses Velayo even presented to Pacific
Rehouse Corporation a copy of the MTC Decision dated 28 June 1994 in Civil Case No. R-1202 ordering
petitioners to vacate the disputed property, which they forcibly entered, and to restore possession thereof
to the Spouses Velayo. The said Decision supported the Spouses Velayo’s claim of title to the disputed
property.

In Spouses Chu, Sr. v. Benelda Estate Development Corporation,36 this Court pronounced that it is crucial
that a complaint for annulment of title must allege that the purchaser was aware of the defect in the title,
so that the cause of action against him or her will be sufficient. Failure to do so, as in the case at bar, is
fatal for the reason that the court cannot render a valid judgment against the purchaser who is presumed
to be in good faith in acquiring said property. Failure to prove, much less impute, bad faith to said
purchaser who has acquired a title in his or her favor would make it impossible for the court to render a
valid judgment thereon, due to the indefeasibility and conclusiveness of his or her title.

In this case, petitioners directed all allegations of bad faith solely at Ochea. The property in question had
already been the subject of five succeeding transfers to persons who were not accused of having
purchased the same in bad faith. Petitioners’ attempt, therefore, to have respondent’s certificate of title to
the disputed property annulled, must fail.

In Veloso v. Court of Appeals,37 this Court enunciated that a title issued to an innocent purchaser and for
value cannot be revoked on the basis that the deed of sale was falsified, if he had no knowledge of the
fraud committed. The Court also provided the person prejudiced with the following recourse:

Even granting for the sake of argument, that the petitioner’s signature was falsified and
consequently, the power of attorney and the deed of sale were null and void, such fact would not
revoke the title subsequently issued in favor of private respondent Aglaloma. In Tenio-Obsequio
v. Court of Appeals, it was held, viz:

"The right of an innocent purchaser for value must be respected and protected, even if
the seller obtained his title through fraud. The remedy of the person prejudiced is to
bring an action for damages against those who caused or employed the fraud, and
 if the latter are insolvent, an action against the Treasurer of the Philippines may be
filed for recovery of damages against the Assurance Fund." (Emphasis supplied.)

Petitioners cite Sps. Santiago v. Court of Appeals.38 In Santiago, the plaintiff and the defendants were the
parties to the void contract of sale of the disputed property. The contract was considered simulated for
lack of consideration and given the fact that defendants failed to take possession of the subject property.
For this reason, the Court did not hesitate to cancel the certificates of title in the defendants’ names, since
they were found not to be the rightful owners of the property. More importantly, the defendants were not
innocent purchasers for value, since they were privy to the nullity of the contract of sale covering the
property. Santiago is clearly inapplicable to the present case. Respondent herein who paid adequate
consideration for the disputed land, took possession of the same, and is already the fifth transferee
following the allegedly fraudulent initial transfer of the land, cannot be placed in the same position as a
vendor who was a party to a simulated sale of a real property.

IN VIEW OF THE FOREGOING, the instant Petition is DENIED. The assailed Decision of the Court of
Appeals in CA-G.R. CV No. 78582, promulgated on 1 July 2005, is AFFIRMED. Costs against petitioners.

SO ORDERED.